Money Changer License
Money Changer License
Authorised Money Changers/ AMCs are entities who are authorised by the Reserve Bank of India as per Section 10 of the Foreign Exchange Management Act of 1999. Accordingly, an AMC may either be a Restricted Money Changer (RMC) or a Full Fledged Money Changer (FFMC). As defined by the Act, an Authorised Person essentially means an authorised dealer, money changer, off-shore banking unit or any other individual for the time being authorised under sub-section (1) of Section 10 to involve in foreign securities or foreign exchange. A license is required by FFMCs to purchase foreign exchange from residents and non-residents visiting India and to sell foreign exchange for specifically approved purposes.
Full Fledged Money Changer (FFMC)
A Full Fledged Money Changer (FFMC) is an authorized entity who may purchase foreign exchange from non-residents and residents of India and sell the same for private and business travel purposes only to the people visiting abroad. As Section 10 of the Foreign Exchange Management Act, 1999 prescribes, authorized money changers are the only entities in the country that can deal in money changing activities and offer necessary foreign exchange services. For the purpose of removing the obstacles faced by foreign visitors and tourists, particular firms and hotels have also been offered the registration to deal in foreign currency notes, coins and traveller’s cheques under the directions issued by the RBI frequently.
No individual is permitted to carry on or advertise that they carry on money changing business unless they own a valid money changer’s license issued by the RBI. Any individual found undertaking any sort of money changing business without a valid license is liable to be penalised under the Act.
Activities of FFMCs
The following are the activities that are undertaken by Full Fledged Money Changer (FFMC).
- An FFMC may enter into a franchise agreement at their convenience for the purpose of carrying on the Restricted Money Changing business which basically involves the conversion of foreign currency notes, coins or travellers’ cheques into Indian Rupees (INR).
- An FFMC or its franchisees may freely purchase any foreign currency notes, coins or traveller’s cheques from the residents as well as the non-residents of India.
- An FFMC may sell Indian Rupees (INR) to foreign tourists or visitors against International Debit Cards/ International Credit Cards and take prompt actions in order to obtain reimbursements through normal banking channels.
- FFMCs may choose to sell foreign exchange for the following purposes.
- Business Visits
- Private Visits
- Forex Pre-Paid Cards
Types of FFMC License
The following are the types of license that are required by an entity to operate as a Full Fledged Money Changer (FFMC).
- Authorised Dealer Category-I Banks (AD Category–I Banks)
- Authorised Dealers Category-II (ADs Category–II)
- Full Fledged Money Changers (FFMCs)
Eligibility to obtain FFMC License
The following are the eligibility criteria that are required in order to operate as a Full Fledged Money Changer (FFMC).
- The Entity that wishes to apply for a Full Fledged Money Changer License must be registered under the Companies Act of 2013.
- The Entity must have a minimum net-owned fund of INR 25 Lakhs in order to apply for a single-branch license and INR 50 Lakhs for a multiple-branch license.
- The object clause of the Memorandum must reflect the activity of money changing that is to be undertaken by the Entity.
- There must not be civil or criminal cases pending against the Entity with the enforcement of the Department of Revenue Intelligence.
- After obtaining the FFMC License, the Entity must carry out its business activity within 6 months from the date of issuance of the Forex License and should, without fail, intimate the RBI.
Documents Required for FFMC License
The following are the documents that are required for obtaining an FFMC License.
- A copy of the Certificate of Incorporation of the Entity.
- The Memorandum and Articles of Association comprising of a provision for undertaking money changing businesses or an appropriate amendment with the same effect.
- A copy of the latest audited accounts of the Entity with a certificate from Statutory Auditors certifying the Net-Owned Funds as on the Date of Application for the License.
- Several copies of the audited Balance Sheet and, Profit and Loss Account of the Entity for the immediate three years prior to the Date of Application for the License, wherever applicable.
- A Confidential Report from the banker of the Applicant in a sealed manner.
- Information concerning the sister or associated concerns operating in the financial sector such as NBFCs.
- A certified copy of Board Resolution to undertake money changing business.
Process of Obtaining FFMC License
The process of obtaining an FFMC License is concerned with the Reserve Bank of India.
- A complete and detailed application for the FFMC License is submitted to the concerned regional office of the Reserve Bank of India.
- The Director of the applicant Entity would be reviewed under the “fit and proper” criteria by the RBI. If everything is in line with the satisfaction of the RBI, then the Full Fledged Money Changer (FFMC) License would be issued within a period or 2 to 3 months.
- Clearance by the Empowered Committee is a necessity and the Reserve Bank’s decision in the subject of granting approval or not would be final and binding.
Note: The Entity will not be considered as eligible to obtain an FFMC License if ay case by any law-enforcing authorities is initiated or is pending against the Entity or any its Directors.
Post Approval Requirements by FFMCs
The following conditions are required to be upheld by the Full Fledged Money Changer (FFMC) after obtaining the license to be so.
- A copy of the registration under the Shops and Establishment Act or any other documentary evidence such as a rent receipt or a copy of the lease agreement must be submitted to the Regional Office directed by the Reserve Bank before the commencement of any business activity.
- New Full Fledged Money Changers (FFMC) must carry out their activities according to the instructions specified by the Reserve Bank often.
- FFMCs must, at each of its business places, display a copy of the money changing license issued by the RBI.
- FFMCs must have a system of Concurrent Audit of all the transactions undertaken by them.
- It is essential that all FFMCs submit their annual audited balance sheets to the respective Regional Office of the RBI.
Records and Registers by FFMC
A Full Fledged Money Changer (FFMC) must maintain the following registers and records with respect to their money changing activities.
- Daily Summary and Balance book of the Foreign currency notes/ coins in form FLM-1.
- Daily Summary and Balance book of Travelers’ cheques in form FLM-2.
- Register of purchases of the foreign currencies from the public in Form FLM-3.
- Register of purchases of the foreign currency notes/ coins from authorized dealers and authorized money changers in the Form FLM-4.
- Register of sales of foreign currency notes/ coins and foreign currency travellers’ cheques to the public in the Form FLM-5.
- Register of sales of the foreign currency notes/ coins to authorized dealers/ Full Fledged Money Changers/ overseas banks in the Form FLM-6.
- Register of travellers’ cheques surrendered to the authorized dealers/ authorized money changers/ exported in the Form FLM-7.
Renewal of FFMC License
An application for the renewal of a Full Fledged Money Changer (FFMC) License must be made before 1 month from the expiry date of the license. No request for the restoration of a money changer’s license shall be accepted after the expiry of the FFMC license.